TMI Blog2000 (2) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... of having filed return of income for the asst. yrs. 1987-88 1988-89 by the due date has not been produced by the assessee. Hence, income declared for these two years (Rs. 18,400) Rs. 18,500 for asst. yrs. 1987-88 1988-89 respectively) is being taken as nil and the above amount is taken as undisclosed income of the assessee for the block period. 3. Similarly, for asst. yr. 1995-96 1996-97, the return of income have been filed on 31st March, 1997, i.e. beyond the time limit, stipulated under s. 139 of the IT Act, 1961. The returned income for these two years is also being taken at nil and an amount of Rs. 2,64,408 for asst. yr. 1995-96 and Rs. 3,49,989 for asst. yr. 1996-97 is taken as undisclosed income of the assessee for the block period. 4. The search was conducted on10th Oct., 1996, hence the period from1st April, 1996to10th Oct., 1996is covered in the block period, the proportionate income of the assessee for this period works out to Rs. 1,84,716 taken as per the income shown by the assessee for the asst. yr. 1996-97. The return of income for the asst. yr. 1997-98 was due in June 1997. However, it has not been filed till date. Hence, the above amount is being taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the returned income for these two assessment years as Nil and made the addition of Rs. 2,64,408 and Rs. 3,49,998 respectively. The learned counsel pointed out that there is mistake in the income for asst. yr. 1996-97 as it was Rs. 2,26,408 and not Rs. 2,64,408 and for that he has invited our attention to copy of computation of taxable income appearing at pp. 67 of the paper book. This point has also not been challenged by the learned Departmental Representative and it appears to be typographical mistake on the part of AO and thus the amount of income in asst. yr. 1995-96 shall be read as Rs. 2,26,408 and not Rs. 2,64,408 shown in the assessment order. 3. The other point of the learned counsel for the assessee is that undisputedly the assessee has not filed return of income for asst. yr. 1995-96 and 1996-97 within the stipulated time under s. 139(1) of the Act but that fact alone will not make the returned income shown in the belated return under the provisions of s. 139(4) as undisclosed income contained in s. 158B(b) of the Act. The plea of the learned counsel was that assessee was income-tax assessee and he had been filing return for earlier years. The learned counsel pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal concluded that failure to file the return for asst. yr. 1995-96 up to the date of search will not give basis to the Department to treat the income of asst. yr. 1995-96 disclosed by the assessee in the return filed belatedly as undisclosed income. The learned counsel submitted that same view was followed by Tribunal Nagpur Bench SMC in ITA(ss) 124/Nag/1997 in the case of Mahesh Kumar S. Aggarwal vs. Asstt. CIT dt.31st Aug., 1998, copy of which is appearing at pp. 79 to 84 of the paper book. On the basis of these two decisions the plea was that AO was not justified in treating the disclosed income for asst. yr. 1995-96 and 1996-97 by the assessee in belated returns as the undisclosed income in the block period and the same should be deleted. 3.1. The learned Departmental Representative as against it has submitted that assessee had admittedly not filed return for these two assessment years as required under s. 139(1) of the Act and it could not be taken as granted that assessee would have filed return of income for these assessment years but for search and seizure operation. The learned Departmental Representative further relied upon the provisions of s. 158BB(1)(c) which provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed. The words "would not have been disclosed for the purposes of this Act" leads to a further posture. From the circumstances and facts of the case, a prudent man would have come to a conclusion that the circumstances indicate that the assessee would not have disclosed this income for the purpose of IT Act. Can a prudent and reasonable man will come to a conclusion, that in the instant case of the assessee on the basis of the facts presented, that the assessee would not have disclosed the income for the purposes of IT Act. It is to be noted that even before the search, the firm who paid the assessee salary and interest had filed the return and showed that whatever were paid to the assessee. In the preceding year, the assessee himself declared the same kind of income. The assessee had paid the advance tax for the year under consideration. All the facts taken together does not lead to a conclusion that the assessee would not have disclosed the income had there been no search. It is true that the time for filing the return under s. 139(1) was over. The assessee did not file the return. The assessee has not disclosed the income. The title of s. 158BBA is "Assessment of undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement with the view taken by the SMC Bench and respectfully following the same it is to be concluded that AO was not justified in treating the returned income of the assessee for asst. yrs. 1995-96 and 1996-97 in belated returns as undisclosed income for the block period and the same are liable to be deleted. 4. Now comes the third amount of Rs. 1,84,716 which is treated as undisclosed income for the period1st April, 1996to10th Oct., 1996. The AO had worked out the proportionate income of the assessee for this period on the basis of income shown by the assessee for asst. yr. 1996-97. The return for asst. yr. 1997-98 was due to be filed in June, 1997 and assessee, as noted by the AO, had not filed the same. The AO added the same as undisclosed income for the block period. In this connection the learned counsel pointed out that assessment order was framed on29th Oct., 1997and return was filed by the assessee for asst. yr. 1997-98 on24th Oct., 1997and thus the amount added by the AO was not justified and the same is subject-matter of assessment order to be framed afterwards. There appears to be logic in the argument of the learned counsel for the assessee. As the return was due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance was placed on the CBDT Circular in which it has been emphasised on the search party that gold jewellery weighing 500 gms. in case of married lady be not seized. It appears that AO after considering all the facts noted that she may be possessed 250 gms. of jewellery and rest of the jewellery was treated as unexplained for the purpose of addition in the block period. 4.3. The AO further examined the case of the assessee that Smt. Dropdi, grand, mother of the assessee bequeathed 125.700 gms. jewellery through will. The AO did not find the alleged will as genuine. The AO also examined the plea of the assessee that ornaments of the assessee as well as of Smt. Dropdi Devi along with Shakuntla Devi were valued by registered Government Valuer as early as on 20th Dec, 1985 through Rajnish Bhushan Jain, a partner of M/s Jain Jewellers and after going through all the facts noted that this report of approved valuer was not inspiring any confidence but was manipulated move of the assessee. He did not find the story of assessee's getting ornaments from Smt. Dropdi Devi through Will as true and treated the said jewellery weighing 125.700 gms. as unexplained investment of the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at said ornaments weighing 495.300 gms. was to be treated as belonging to Smt. Rita Aggarwal who was married in the year 1979 and keeping in view the status of her family as she hails from a very rich family and her parents were also dealing in jewellery business. About 93.600 gms. jewellery the plea of the learned counsel for the assessee was that the same belonged to Miss Nidhi and Miss Yamini, daughters of the assessee and in that Circular of CBDT it has been mentioned that 25 gms. gold ornaments per unmarried lady would not be seized and if applied that yardstick to the facts then the ornaments belonging to two daughters of the assessee were slightly excessive to the said yardstick but keeping in view the status of the family it cannot be believed that it was more. About 58 gms. of gold jewellery the contention of the learned counsel is that it belonged to Satish Aggarwal. The above referred to CBDT Circular further provides that 100 gms. gold jewellery per male member of the family be not seized and in view of this the explanation of the assessee should have been accepted. The contention of the learned counsel is that AO had wrongly rejected the explanation and there was no ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur room does it belong to you? Kindly explain. Ans. Yes. Jewellery belongs to me which were received from in-laws, parents, relations and friends over period of times on different occasions." 4.9.1. It was thus contended by him that the assessee adopted the theory of bifurcation of her jewellery amongst his family members in the light of Circular of CBDT. He stressed that the statement recorded at the time of search had more authentic and evidentiary value over the explanation furnished later. He further placed relianced on the order of AO and submitted that theory of execution of will is prima facie not believable because the will was not a registered document. It was not signed by two witnesses and it has not been proved that the will was bearing the thumb impression of Smt. Dropdi Devi. Further, the plea of the assessee that Smt. Dropdi Devi got valued the ornaments on20th Dec, 1985from Government Approved Valuer, Rajnish Bhushan Jain was rightly rejected by the AO for the reasons recorded in the assessment order and additions were rightly made. 4.10. We have considered the rival submissions and also perused the material to which our attention was drawn during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X
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